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The rice root-knot nematode (Meloidogyne graminicola) is one of the most destructive pests threatening rice (Oryza sativa L.) production in Asia; however, no rice resistance genes have been cloned. Here, we demonstrate that M. graminicola-resistance gene 1 (Mg1), an R gene highly expressed at the site of nematode invasion, determines resistance against the nematode in several rice varieties. Introgressing Mg1 into susceptible varieties dramatically increases resistance, for which the leucine-rich repeat domain is critical for recognizing root-knot nematode invasion. We also establish the transcriptome and cytological changes that allow a rapid and robust response during the incompatible interaction that occurs in resistant rice upon nematode invasion. Furthermore, we identified a putative protease inhibitor that directly interacts with Mg1 during Mg1-mediated resistance. Our findings provide insight into the molecular basis of nematode resistance as well as valuable resources for developing rice varieties with improved nematode resistance.